Samsung profits fall again, but recovery is on the way

Samsung has warned investors to expect another fall in profits in the first quarter of 2015, as the mobile company struggles to recover from last year’s disappointing sales of its Galaxy S5 handset.

The South Korean firm revealed that its operating profit for the first three months of the year was down 30.5 per cent to 5.9 trillion won (£4 billion) when compared to the same period twelve months ago.

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Although disappointing, the news is hardly a shock considering that Samsung’s profits for Q4 2014 fell by 37 per cent, while Q3 fell by 60 per cent year-on-year. The smartphone manufacturer lost the number one mobile vendor position to Apple as it saw competition from iPhones at the top end and budget Chinese handsets at the bottom.

Samsung’s earnings guidance for 2015, however, is far from disastrous and the company is predicting a recovery fuelled by the release of its flagship Galaxy S6 smartphone. Samsung is expected to sell 50 million units of the new device during 2015, which would represent a company record.

Moreover, given that Q1 performance is usually disappointing compared to the rest of the year, the figures set Samsung up for a more promising year.

"These results are meaningful and will lead to very strong earnings expectations for the second quarter," HMC Investment analyst Greg Roh told Reuters.

Aside from a better performance from its mobile division, Samsung will also be hoping that 2015 brings continued growth from its chip-making business, which has out-earned the smartphone division during the first quarter of the year, according to analysts.

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Reuters predicts that throughout the whole of 2015, profit is likely to rise by six per cent to 26.5 trillion won, which will be welcomed by Samsung after the disappointment of the last twelve months.